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Saturday, February 11, 2017

APPS SPECIAL..... How health apps are promising to reshape healthcare

How health apps are
promising to reshape healthcare

Two
executives from a digital diabetes-management start-up discuss the importance
of a patient focus and ways innovation is shaping the industry.

In the past few years, health-companion apps that
help patients manage chronic conditions such as diabetes and asthma have
emerged as a fast-growing and potentially disruptive segment of the healthcare
market. Companion apps also offer a way to collect vast quantities of real-world
patient data that can be used as appropriate to improve treatment protocols and
drug development. In this interview, two executives from mySugr, a start-up
that designs apps for diabetes management—Frank Westermann, the CEO and
cofounder, and Anton Kittelberger, the COO—talk with McKinsey’s Stefan Biesdorf
about the promise of patient apps in reshaping healthcare.

McKinsey: In today’s environment, apps
can be created by anyone with a good idea and some programming skills. When
barriers to entry are low, how do you differentiate yourself from the
competition in digital diabetes solutions?

Frank Westermann: It always depends what
exactly you want to do. Regulation is certainly an entry barrier for anybody
who is not familiar with it. If you want to be active in the digital health
space and go beyond a wellness or fitness app, you face a complex regulatory
landscape that requires significant investment to be able to navigate. Also,
there is already stiff competition in digital health, and it requires precise
positioning and a well-defined competitive advantage if you want to develop
traction with a health app.

At mySugr, we are firm
believers that innovation in digital health will be driven by the patient and
by patient-centric solutions. We focused on patients from the very beginning,
whereas many of our competitors target physicians, hospitals, or solutions for
the healthcare industry. Our patient focus is rooted in our history and makeup
as a company: Anton and I, as well as 30 percent of our employees, are
diabetics. This allows us to work to create something that patients actually
need and want to use, because we’ve also tested it ourselves.

McKinsey: You’re known for having a
cool brand—the mySugr monster—as well as for being unconventional and focusing
on ease of use and gamification. How did that come about?

Anton Kittelberger: When we first started,
automatic transfer of glucose values into the app was difficult, and we
therefore made it a priority to make data entry easy and fun for patients. That
helped us differentiate ourselves. With automatic data transfer now easier, we
use gamification for other purposes in our app, for example, to encourage
patients to engage more with their health data to enable them to better manage
their condition.

Frank Westermann: Gamification isn’t an end in
itself; it always serves a purpose. Diabetes is a serious disease, and we
aren’t seeking to trivialize it.

McKinsey: With your large installed
base, you’re collecting more and more data. How are you thinking about using
this data to influence health outcomes?

Frank Westermann: We’re at the beginning of a
journey. As data from connected devices increase in volume and quality and the
data cloud gets denser, more opportunities are opening up for pattern
recognition. For example, we can use data generated by continuous glucose
monitoring to predict patients’ blood-sugar levels for three hours. That has a
big impact and allows patients to be better equipped to manage their disease.
We’re also starting to use this data to feed information to our coaches.

McKinsey: Can you measure the impact of
your app?

Frank Westermann: Our user data shows that the
more the app is used, the better the patient outcome. We can also see which
features drive use of the app. We’re looking to solidify our outcomes
information through a clinical trial focused on two parameters: HbA1c value
(glycated hemoglobin) and timing range. We’re looking at how patients’ use of
the app is related to the lowering of the HbA1c value and how to get them to
stay in the 6.5 to 7.0 percent range for longer to quantify the outcomes.
Higher HbA1c levels are associated with significantly higher hospitalization
costs in diabetic patients.

McKinsey: How is your business model
evolving? You started as a free app, but where are you now?

Anton Kittelberger: Our business model has
evolved. We focused on our B2C model to grow our user base, with a free basic
version and a subscription-based pro version. The uptake of the subscription
version helped us demonstrate value and made us more attractive to our B2B
partners. On top of that, we’ve built a solid business with diagnostics
specialists, to integrate their devices, and with pharma companies as a channel
for educating patients and launching campaigns. We’ve also made ourselves more
attractive to payors by showing that patients’ use of our app is associated
with better control and fewer hospitalizations.

McKinsey: Are you planning to work
actively with other healthcare stakeholders?

Frank Westermann: Yes, absolutely. In the
United States, for instance, we’ve recently launched a coaching product that
links you to a certified diabetes educator who has full access to your data and
can give you advice at any time. We’re also looking to form a partnership with
German payors to roll out a program for diabetes educators.

McKinsey: Every industry is
experiencing a wave of digitization. What do you think will separate the
winners from the losers in health tech?

Anton Kittelberger: You need to stay close to the
patient and continually improve their experience. I see parallels between
healthcare and telecoms. In the telecoms industry, the infrastructure providers
eventually lost out to the handset and app companies that had direct
relationships with end users. In healthcare, the companies that don’t have
direct contact with patients may become more like those commodity infrastructure
providers.

In healthcare,
physicians have traditionally been king; they had the contact with patients, so
you focused your sales and communication efforts around them. With digital
health, the physicians are losing some of their relevance as the patient takes
more control and becomes more important as an informed decision maker.

Frank Westermann: But we don’t see ourselves as
disintermediating the physician. In fact, our technology lowers the barriers
between the patient and physician. Just getting to see a doctor can be a
complex and time-consuming task. Our vision is to have technology enable more
touchpoints with a physician to improve well-being.

McKinsey: So could your app help free
up physicians to focus on more serious cases, with a thinner support model for
well-managed patients?

Frank Westermann: In some ways, the model we
foresee is one that is more intensive, with multiple immediate touchpoints with
skilled healthcare professionals such as diabetes educators. We see huge value
in that for patients.

Anton Kittelberger: I don’t think we are
disrupting the physician’s business model. What will change is how pharma
companies and diagnostic players go to market: not just via a physician but
also via mySugr directly to patients. But that doesn’t mean excluding the
physician.

McKinsey: Let’s look at how big pharma
does digital. Why don’t we see more success stories?

Frank Westermann: Pharma traditionally works on
20-year time frames, driven by the patent cycle, whereas we think about
renewing our technology every year. Big companies often suffer from inertia,
mind-set and skills gaps, and a cultural disconnect; it’s hard to switch
thousands of employees from a physician focus to a patient focus in a short
period of time. Some companies manage to externalize digitization by creating a
separate unit or buying a start-up, but that isn’t easy; moving to a digital
business model is a major shift for any large organization. Even if individual
thought leaders see the opportunities, they can easily get bogged down in
pharma’s long decision-making cycles.

McKinsey: How will the collection of
personal health data change the way pharma companies think about innovation?

Anton Kittelberger: I can see it influencing drug
development, especially the validation of new compounds. Instead of creating a
controlled environment in a clinic, we can use a health app like mySugr to
gather large quantities of longitudinal patient data in the real world, which
could speed up clinical development and improve quality.

McKinsey: What about data privacy? Are
existing laws relevant in a digital world, or are they in fact holding back
innovation?

Frank Westermann: How healthcare data is used
is very important, and it’s the role of governments to regulate it, though most
are moving too slowly. Large corporations push the boundaries of data privacy
in healthcare much more than small players like us. I don’t think sensible
regulation would hinder innovation, and in fact I’d wish for more conversation
with regulators on data privacy, especially in Europe. In the United States,
the Food and Drug Administration is taking a more progressive stance and is
much more willing to discuss healthcare data and its uses.

As a patient myself, I
do believe apps need to be regulated to protect patients against misuse or
excessive sharing of their data. But the sensible use of data should be allowed
so as to improve treatment guidelines and healthcare as a whole.

McKinsey: Are privacy or security
concerns a barrier to adoption, especially for older patients?

Frank Westermann: It’s our responsibility to
protect patients as far as we can. We put processes in place to protect our app
and employ hackers to test the security of our system. We focus not so much on
educating patients as on making the app intuitive and creating the best
possible user experience. There’s no reason why older patients can’t use it,
especially as they get more comfortable with using smartphones and apps in
general.

McKinsey: What about your long-term
vision? Are you considering expanding into other therapeutic areas?

Frank Westermann: We have no plans to expand to
other disease areas. We live and breathe diabetes, and that gives us our
competitive edge. Our long-term plan is to become a digital diabetes clinic: a
full-service platform that makes life easier for people with diabetes. We’ve
made a start by building a diabetes-educator program, and we also want to bring
in physicians. We see our role as being an enabler in any context where the
patient doesn’t actually need to be present in the physician’s office.